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BPO venture is not as easy to set up as assumed by wannabe entrepreneurs.
Unlike a software contract where one can take a byte size pilot,
prove capabilities, ‘wow’ the customer and ramp-up operations,
BPO generally involves an all-or-nothing approach, writes MOHAN
BABU
The ITeS boom, encompassing the IT and BPO sector,
is seeing renewed interest among executives at technology companies
who see a BPO wing as an add-on to the array of services that they
offered to clients. The services being offered range from low-end
call centres to high-end processing bureaus that provide seamless
24X7 operations to clients wishing to have their operations, including
HR administration, payroll processing, financial analysis, etc,
done cheaper. The past few years here also saw the number of operators
in the BPO sector in India growing by leaps and bounds. The spate
of recent mergers and acquisitions are probably an indication of
the vibrancy of this sector.
BPO operations in India, unlike IT operations,
have also seen a divergence in location and reach, especially because
of the divergent talent pool required to service the industry. Call
centres have mushroomed in small towns and cities across South India
and in other parts of the country, barriers to entry notwithstanding.
What are these barriers to entry? Suitable hardware, software, high-speed
networks, etc, alth-ough affordable for small operations, are expensive
in the context of setting up a small or mid-sized operation. While
conceptualising a BPO centre, entrepreneurs are plagued by two pertinent
issues that I will call the ‘Catch-22 issue” and “all
the eggs in one basket syndrome.”
The Catch-22 issue
Most large organisations prefer to source their
call centre and other business processing jobs to outsourcers who
can demonstrate the capability to handle the task, along with access
to infrastructure one can directly walk into. They do not expect
any significant lead or lag time from the time the deal is inked.
Setting up such infrastructure is not cheap,
especially when one does not really have a ready order or client
waiting to be serviced. Herein lies the chicken-and-egg problem;
and, unlike a software contract, where one can take a byte sized
pilot, prove one’s capabilities, ‘wow’ the customer
and ramp-up operations, business process outsourcing generally involves
an all-or-nothing approach.
All eggs in one basket syndrome
Assuming an entrepreneur crosses the first hurdle
by setting up a venture, bagging clients and operating profitably,
he is still at risk because he has probably bet the farm on one
client. Given the fickle nature of clients and an uncertain economic
climate, this strategy can easily backfire if the client pulls the
plug. Adding a new client, doubling the capacity, etc, are fraught
with the same Catch-22 issue articulated earlier.
Several readers have written to me asking me
to help them realise the BPO-entrepreneurial dream. Many wrote after
sinking hundreds of thousands of rupees into dead-end ventures.
Sometimes I wonder if they haven’t heard of the concept of
due-diligence and having a business-plan vetted. If you recall,
I had mentioned about a businessman from Satara in Maharashtra who
wrote to me a few months ago. With absolutely no knowledge of the
medical transcriptions business, he had leased a huge commercial
space and bought 50 PCs with all the paraphernalia, including a
high-speed Internet connectivity, etc. If I were in a position to
help them, it would be a different story.
Holding on to my day-job, juggling my consulting
assignments, and writing this column, along with sporadic speaking
engagements, keeps my hands full. As I think more about the problems
of setting up BPO ventures, I am beginning to think that there may
be opportunities for consultants who can step in and advice wannabe
entrepreneurs on the intricacies of BPO operations.
Opportunities also exist to assist BPOs streamline
their operations, help them in creating scheduling systems, managing
the critical paths, identifying and nurturing key talent, people
management, etc. Skills in transition management, knowledge management,
etc, are bound to be in demand. Any takers?
Mohan Babu is a US-based software consultant
trying to find the ‘sweet spot’ where IT meets business.
E-mail: mohan@garamchai.com
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